Lloyds Chief Executive Fires Starting Gun on Sale of the Century

By

Margot Patrick

Mar 1, 2011 4:18 pm GMT

New Lloyds Banking Group CEO Antonio Horta-Osorio got off to a running start in his first day in the job Tuesday, saying the bank will move quickly on a planned branch-network sale as he conducts a broader strategic review due for completion by the end of June.

Getting the branches out the door is a condition of state aid Lloyds received in the financial crisis, and it has to happen by November 2013. By wrapping up the sale well ahead of that deadline, Mr. Horta-Osorio can keep the focus on Lloyds’ continuing operations and its future as an independent entity.

Advisers are now vying for the mandate and a sale is seen as being agreed as soon as the second half of the year. Interested bidders include Richard Branson’s Virgin Money and NBNK Investments, the banking vehicle headed by Lord Levene and former Northern Rock CEO Gary Hoffman.

Speeding up the disposal put paid to any sense of a seamless transition between Mr. Horta-Osorio and former CEO Eric Daniels, though. Mr. Daniels, as recently as Friday, said the sale would only come after the Lloyds and HBOS businesses were fully integrated, as he presented a final set of results showing strong improvements at Lloyds last year as bad loans fell and net interest margins rose.

Analysts and journalists were surprised that Mr. Horta-Osorio didn’t take part in the earnings presentations, though there was a general sense that a more pessimistic tone from the bank on margins, funding costs and the U.K. economy was setting the stage for some axe-swinging.

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